LinkedIn To Mine User Data For Corporate Espionage
Think Mark Zuckerberg’s Beacon is scary? Reid Hoffman has some user “tracking” of his own in store.
In November, The Washingotn Post reported the sad tale of how Facebook “ruined” Facebooker Sean Lane’s Christmas when Mark Zuckerberg conspired with Overstock to alert his “friends,” including his wife, of his happy (supposedly surprise) purchase of a diamond ring, for his wife.
Reid Hoffman may soon have some (serious) unwelcome surprises of his own, for the thousands of companies represented within the “rich profile data” of “17 million professionals” hailed by LinkedIn as the “largest group of business decision makers on the Web.”
LinkedIn’s Mike Gamson is touting an impending fee-based “Research Network” aimed at capitalizing on the reams of data LinkedIn houses on those millions of people:
The service will help hedge fund managers and investment banks find people who used to work at a company they’re interested in, or even who is working for a customer of a company they are interested in. (as cited by eWeek)
In other words, insider corporate intelligence, or espionage:
Let’s say I’m thinking about making an investment in a producer of product X. I might want to speak to people that sell that product, people that buy that product, or that used to work at that company as part of my research process to have a better understanding of how valuable that product is.
BUT, “let’s say” the “producer of product X” does NOT want current or past employees talking to hedge funds and investment banks about its proprietary, confidential, insider goings on. LinkedIn’s financial incentives to its “17 million professionals” may nevertheless be hard to resist. Gamson boasts, “If we can begin to help our members make money and help our clients find the right people, that’s when you create value on both sides and we like those situations.”
Corporations about which LinkedIn users divulge insider information to hedge funds and investment banks, however, will undoubtedly NOT “like those situations.”
Barron’s Business Dictionary on corporate espionage:
Act of spying. An example is spying on the activities of another company by improperly gathering information about the competing company’s new products or practices. Usually the spy is paid a fee for the information obtained.
The danger of corporate espionage, according to The SANS Institute:
Corporate espionage is a threat to any business whose livelihood depends on information. The information sought after could be client lists, supplier agreements, personnel records, research documents, prototype plans for a new product or service. Any of this information could be of great financial benefit to a scrupulous individual or competitor, while having a devastating financial effect on a company. Just about any information gathered from a company could be used to commit scams, credit card fraud, blackmail, extortion or just plain malice against the company or the people who work there.
In Web-based social networking, six figure Fortune 500 execs seek the discretion and confidentiality that LinkedIn uniquely offers, Reid Hoffman has indicated to me. The “LinkedIn Research Network” appears to thwart such desired privacy, however.
The “LinkedIn Research Network” also appears to contradict the spirit of LinkedIn’s Privacy Policy which asserts “We will never sell, rent, or otherwise provide your personally identifiable information to any third parties for marketing purposes.” How then will LinkedIn market its “Research Network” company-specific “expertise”?
What’s more, LinkedIn’s “primary research service” risks impacting non-disclosure and confidentiality agreements and insider trading restrictions.
Linkedin claims a “simple philosophy”: relationships matter. YES, but the way relationships are monetized matters as well.
MORE: AP On LinkedIn: Social Networking Gold Mine at $5 per User? and Reid Hoffman: LinkedIn About Face (book) and Beacon Privacy Solution: STOP USING FACEBOOK! and Multiply.com CEO to Facebook, MySpace: STOP Claiming to be Real-Life Social Networks, INTERVIEW
PLUS: Google Apps Meets Les Miserables: Enterprise IT Team DREAMS Big and Why Silicon Alley VCs Should Do Blogging Due Diligence, Too